Frasers Group’s results for the half year to the end of October showed a number of sales and profit increases, but some falls too. And while the rises were admittedly not generally large, in the current environment they show that the company remains one of the winners in UK retail as well as internationally.
It’s clearly not immune to the slowdown in the luxury segment that has been widely seen in the latest year. But the diversity of its holdings and in particular the strength of its sports/althleisure retail business have really helped it to power through in the latest six months.
Looking at the numbers first, total revenue rose 4.4% to £2.769 billion and retail revenue rose 4% to £2.681 billion. This was largely due to the impact of businesses acquired in H2 of the previous financial year (FY23) and a strong underlying performance from Sports Direct. And while excluding acquisitions and disposals, on a currency-neutral basis, revenue only increased by 0.8%, that’s a fairly strong figure compared to many of the sales declines that have been reported of late by its retail peers.
Retail gross profit rose to £1.12 billion from £1.04 billion and group gross profit was £1.19 billion, up from £1.12 billion. The group gross margin rose to 43% from 42.3%.
Its retail profit from trading was up 25.7% £364.7 million, driven by that strong trading performance from Sports Direct “reflecting the continuing success of the elevation strategy and strengthening brand relationships”. But group profit from trading was down 6% at £412.5 million.
Operating profit was up 4.4% at £298.1 million and adjusted profit before tax rose 12.6% to £303.8 million, despite lower profits from the disposal of properties and subsidiaries. Reported profit before tax rose 8% to £310.2 million and reported profit after tax was up 5.6% at £234.6 million, “reflecting the strong trading performance partially offset by a reduction in foreign exchange gains and an increase in [the] effective tax rate”.
Within those figures, UK Sports Retail revenue rose 0.8% to £1.485 billion. The unit accounts for 53.6% of total group revenue and the company said Sports Direct more than mitigated a decline in Game UK and Studio Retail.
Premium Lifestyle revenue rose 3.1% to £550.1 million. It accounts for 19.9% of total group revenue and the company said that it was impacted by “planned House of Fraser store closures and a softer luxury market offset by sales from the businesses acquired from JD Sports Fashion plc in H2 of FY23”. In fact, excluding acquisitions and disposals, revenue actually decreased by 11.2%.
International Retail revenue was up 13.2% at £645.8 million. This makes up 23.3% of total group revenue and the rise was due to growth from Game Spain, and the Sports Direct business in Europe, especially in Ireland, as well as the acquisition of the MySale business in Australia at the end of H1 FY23.
CEO Michael Murray called it “a strong performance… with great momentum as we head into the Christmas trading period. The elevation strategy continues to drive strong trading performance across the business with good growth in Sports Direct supported by our brand partners”.
He added that its long-term ambitions for its Premium Lifestyle business “remain unchanged although it is likely that progress will remain subdued for the short-to-medium term in the face of a softer luxury market. However, we continue to invest with confidence in our unique proposition”.
And he said that as previously mentioned, FY24 started well. This strong trading momentum continued throughout the first half and into the early recent weeks of the second half, especially at Sports Direct.
It’s still confident of achieving adjusted profit before tax in the range of £500 million to £550 million for the full year.
Copyright © 2023 FashionNetwork.com All rights reserved.